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5 Tips to Increase Your Credit Score Quickly

A minimum credit score is required to apply for some mortgage and loan items. Even if your ranking is good enough to apply, the prices you'll be given will be smaller than if you had a better score.

We've learned some tactics that, after working with thousands of personal credit records over the years, can often give you the much-needed instant credit score boost—sort of like credit jumper cables!

Here are a few examples where this might be useful:
  • You've been pre-approved for a mortgage, but the bank or broker says your credit score is too bad and you're ineligible.
  • You'd like to get a mortgage and a home equity line of credit (HELOC), but the lender claims you'll need a better credit score to qualify for each.
  • You're dealing with a mortgage broker who is helping you get a loan from a B-lender. She advises you that if your Equifax Fico score is above 680, your interest rate will be lower.
And it’s not just about homeownership.
  • You're getting ready to make the case to potential tenants. This also requires a credit score these days. If your ranking is in the 700s or even 800s, you would have a better chance.
  • Your credit score is too poor to qualify for a personal line of credit or a high-end personal credit card.

1. Use The Optimal Utilization Strategy

When it comes to improving your personal credit score, you should consider how much credit you're using for each credit facility. What I mean is, what percentage of your usable credit is being listed as a balance?

The percentage use on your credit cards will have a big effect on your credit score. According to Equifax Canada, usage accounts for 30% of your personal credit score.

One possibility is that a furniture store or a home improvement store gave you a “pay nothing for a year” deal. While the balance on this card will be minimal, whether it is at or above the real card cap, it is negatively impacting your personal credit score. Now is the time to pay it off!

Another scenario: suppose you have three credit cards, each with a limit of $10,000. Let's presume one card has a $9,900 balance owed, and the other two have no balances. This may be because you're attempting to receive points on a specific card, or because you accepted a balance transfer promotional bid.

Your credit score is likely to be smaller than if the charges were evenly distributed between the three cards—i.e., one with a balance of $3,300, or 33% of the cap.

Your overall consumption is constant, but you no longer have a single card with a 99 percent utilization rate. You can see a good little score bonus if you can compensate or reduce the amount owing on the one with a balance of $9,900.

2. Use the Statement Date Strategy

It's possible that the right thing for you to do is actually pay off your credit card debt. If time is of the essence, you can prepare ahead and complete the tasks in the proper order.

Obtain the most current available statements for all of the credit services. Also, make a list of the month on which the declaration was printed. The most of the time, the credit bureau reports the balance on the statement day.

And it's fair to say that the next announcement will be released on the same day of the following month, give or take a day. As a result, make sure to budget for your payments. Enable for multiple business days for internet purchases to be processed. Pay payments can be accepted immediately or overnight if you're paying a credit card issued by your own bank.

3. Pay It Down and Keep It Down

When your boundaries aren't very broad, this is particularly necessary. Assume you're a model citizen who regularly uses her credit card and pays the balance in full each month after getting the monthly statement and before the due date.

Taking advantage of the grace period provided by all card issuers is the "right" way to handle your credit. However, since current account interest rates are so poor these days, there is no advantage of attempting to use up the full grace period. It's much easier to pay off the whole balance before your statements arrive. You've been an even better person, and the balance posted to the credit bureau will now now be very limited, if at all.

4. Exercise All Dormant Credit Cards and Lines of Credit

Some people have credit cards but seldom use them. People have a tendency to choose one credit card over another (perhaps because of their bonus program) and ignore their other cards. We don't really need our personal line of credit much of the time.

If you want to improve your credit score, you can use all available credit on a daily basis, even if it's only for a nanosecond.

Since these older credit facilities contribute "score fuel," closing them is rarely the best option. According to Equifax Canada, your credit background can account for up to 15% of your personal credit score. 

These credit lines may become stale, and they may not be contributing to your personal credit history. With a small transaction, you can update the DLA (date of last activity) and then pay it online right away. If it's a personal line of credit, just pass $10 to yourself and then $10.50 back the following day.

If you have credit cards that haven't been used in months or years, take them to the store or gas station and use them only once before paying online. These cards will record the date of last operation as the current month and year after the next statement, which could earn you some much-needed points.

5. Scour & Clean All Reporting Errors

There may be any erroneous details about your personal credit history that is lowering your ranking unnecessarily.

Here are a few examples:
  • You have two or three personal accounts with the credit bureau, and the data is dispersed and fragmented. Combining all of your credit reports into one could boost your score and improve your image. (This often occurs in people with difficult-to-spell names or others who have legitimately changed their names.)
  • When it's not you, late payments are registered. Maybe you have a sibling of the same name as you. 
  • The router you returned to the cable provider is listed as a collection, even though you actually returned it to a local store.
  • You submitted a consumer petition, and all of the debts contained in the proposal should have zero balances and a "R9" grade. This usually indicates that a debt has been assigned to collection or that it is deemed uncollectible.
  • It's possible that certain late fees are erroneous. Payment history accounts for 35% of your personal credit score, according to Equifax Canada.

Mortgage brokers will help you expedite an audit through Equifax Canada. What you could take two months to do, we will do in a few days. If you're short on time, keep that in mind.

The Takeaway

This summary is a simple way to look at your credit report and outlines steps that are clearly designed to improve your credit score quickly. These pointers aren't quite the same as when it comes to maintaining good credit or lowering borrowing costs.

You should ideally be consulting with someone who is familiar with all of the complexities and will assist you in determining 
what the goals should be.

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